This Makes a Great Portfolio Manager Commentary

We’ve written and edited tens of thousands of portfolio manager commentaries over the years, so we have a pretty good handle on what elements are required to produce a great commentary. Here are some items we feel are important components of a well-crafted commentary.

A well-written, relevant macroeconomic review

The macroeconomic portion of a commentary should provide details of the economic events and factors that may have impacted the performance of your fund during the period. Additionally, it should be relevant to the fund’s category.

For instance, if you are writing about a U.S. equity fund, the macroeconomic review should predominantly be about the U.S. economy – including any moves by the U.S. Federal Reserve Board, economic figures, as well as the performance of relevant sectors. You can refer to the performance of individual companies, but that type of information is usually best contained in the attribution section of your commentary.

Attribution information: contributors, detractors and the “whys”

This is where you list contributors to – and detractors from – the fund’s performance. This information could be broken down by sector, geography and/or individual security. To keep this section easy to understand, we generally like to list contributors to performance in one paragraph and detractors from performance in another.

It’s important that you explain why these holdings performed the way they did. This gives investors important insights into the factors behind the performance of underlying holdings. Without these reasons, all you’re doing is regurgitating the fund’s attribution report, which provides little value to the end investor.

The fund’s positioning … and the reasons behind this positioning

Inform your reader about your trading activity during the period and fund’s positioning at the end of the period to highlight how you are working to meet the fund’s objectives. Convey how you have been deploying capital within the fund’s strategic framework to meet its stated risk/reward objectives.

We believe these are some of the most the important elements of an informative and useful portfolio manager commentary. Your commentaries can act as great opportunities to showcase the performance of your fund, explain why it has either outperformed or underperformed its benchmark, and tell your reader how the fund is positioned for outperformance in the coming period.